Economic prospects | PERSPECTIVE

2023-05-29 16:24:29

Juan Carlos Zapata

This week I will have the opportunity to participate in the forum of the Council of the Americas, based in Miami, for a high-level presentation on the Economic Outlook for Guatemala. A forum that will have an electronic presentation by President Giammattei and then a face-to-face discussion with businessmen and investors from various multinationals that have a presence in the country, together with the Minister of Economy and his servant.

This is a very important and timely event, given that just last week the International Monetary Fund published its annual Article IV report for Guatemala, mentioning that the country has a “solid record of prudent macroeconomic policies and large remittance flows that they provide the country with ample buffers to navigate a challenging global environment and amid tough global financial conditions. In 2022, Guatemala’s real GDP growth was 4.1 percent (3.4 percent projected for 2023), with a fiscal deficit below 2 percent of GDP, driven by stronger fiscal performance and high import prices and the stock of public debt below 30 percent of GDP. Domestic private demand remained strong and bank credit to the private sector grew positively at double-digit rates.

The positive perspectives shown by the report also recommend important changes in institutional matters in areas related to infrastructure, human capital, social policies and legal certainty, aspects that are being addressed in the Guatemala Does Not Stop initiative, where the growth of the attraction of investment, through clear economic growth, with a focus on employment and a series of institutional reforms that must go through the Congress of the Republic to advance.

In the public debate there are conflicting views on whether institutional reforms are needed, but in this the Article IV report is clear, initiatives that have remained stagnant in the Congress of the Republic such as the General Road Infrastructure Law, to give an example, they could accelerate public investment, something that although it has increased 0.4 percent of GDP in this administration, rising to 1.7 percent of GDP, is still low compared to other Latin American countries, which are investing up to 6 percent of GDP in public infrastructure.

Being able to present these analyzes and comment on how it has been possible to work jointly between the public and private sectors, academia, civil society and local governments is essential so that different businessmen can make better decisions to increase their investments in the country, being less than a month after the first electoral round and with very positive prospects for maintaining a work agenda focused on attracting investment and generating formal jobs.

It will be important for the next government to continue participating in this type of forum and to continue with the Guatemala Does Not Stop initiative so that investors and multinational businessmen can delve into the challenges and opportunities for the country that help generate transformative actions, positioning the positive macroeconomic and investment promotion policies that this government has implemented and that we know a next government should continue, taking advantage of the capacity for growth, urbanization and the demographic bonus that our country has to generate more jobs.